Treasuries advance on Europe jitters, US stocks recoup losses

(Bond Market Wrapup for June 28th, 2012) The US government auctioned $29 billion in seven-year notes that fetched a record low yield for the third consecutive month as Europe’s turmoil increased the attraction of safe-haven notes.

The benchmark 10-year yield dropped to its lowest level in more than a week as Treasuries advanced over fears that today’s Supreme Court decision to uphold President Obama’s health care reform law would put additional burden on an already struggling economy. The so-called individual mandate that requires all Americans to buy health insurance might act as an additional tax, thus giving an excuse to consumers to hold back other expenses. Yield on 10-year notes fell three basis points to 1.59 percent while the 30-year Treasury Bond yield dropped two basis points to close at 2.67 percent in late afternoon trading, New York time.

10 Year Treasury Yield 1 Month Chart

Bond Funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 31 cents, or 0.24 percent, to close at $126.85 while the Vanguard Total Bond Market ETF (BND) gained 9 cents, or 0.11 percent to finish at $84.44.

Speculations of a breakthrough in Europe’s effort to tide over its sovereign debt crisis fueled a late-session recovery; helping US stocks close with small losses. The chatter over a possible advancement in negotiations grew louder after a Bloomberg report claimed German Chancellor Angela Merkel has cancelled her scheduled press conference on Thursday night.

The Dow Jones Industrial Average (DJIA) closed 24.75 points, or 0.2 percent, lower at 12,602.26, recovering from a 177 points fall. 16 of the 30 components within the blue-chips index closed lower, with JP Morgan leading the day’s biggest percentage losers after a New York Times report said the bank’s infamous losses on credit derivatives may exceed $9 billion. Other losers for the day included Intel (INTC), Cisco (CSCO) and United Technologies (UTX) while AT&T (T) and Chevron (CVX) were among the gainers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 2.81 points, or 0.2 percent, to 1329.04 with technologies faring the worst. All the 10 business closed lower.
The NASDAQ Composite Index (COMP) dropped 25.83 points, or 0.9 percent, to close at 2849.49.
Advancers just managed to stay ahead of decliners on the NYSE.
Oil prices for August delivery slid $2.52 to close at $77.69 a barrel.
Gold futures for August delivery dropped $28 to $1550.40 an ounce.